Sign InPalantir (PLTR) Stock Evaluation: Bullish Outlook Amidst Government Contracts and AI Ventures
Summary
Palantir Technologies Inc. has shown strong performance and potential undervaluation, but technical analysis suggests a possible short-term correction before resuming its upward trajectory, making it a 'Hold' with a 'Buy' potential in the long term. (October 12, 2023)
Fundamental Analysis
Palantir Technologies Inc. (NYSE: PLTR) closed at $17.94 on October 12, 2023, which marks a slight change of 0.02 (0.11%) for the day. The stock has shown strong performance, with the last close price slightly below the resistance at $17.99, and comfortably above its support at $17.04. Palantir has a market capitalization of approximately $38.45 billion and has approximately 2.15 billion shares outstanding.
In terms of the price ranges, Palantir's low was $17.55 and high was $18.24 on the last trading day. This spread was well within its average true range (ATR) of $4.73. From a yearly perspective, Palantir's low price was $5.92 and the high was $20.24.
Palantir's earnings per share (EPS) stands at -$0.02, which has resulted in a negative price-to-earnings (PE) ratio indicating a lack of profits. The next earnings announcement is expected on November 6, 2023, which could influence the stock’s performance.
The forecasted discounted cash flow (DCF) is $19.14, which is higher than the current stock price, suggesting potential undervaluation. The analyst predictions show a high target of $25 and a low target of $4.5 with a median prediction of $9.5. Importantly, consensus among analysts indicate 'buy'. It’s important to note the discrepancy between analyst target predictions and the current stock price.
In recent news, Palantir's stock has experienced a significant rally due to its thriving business in government contracts. Additionally, encouraging upward trends in the company's return on invested capital (ROIC) have been hinted, even though Palantir's ROIC remains negative. Lastly, Palantir has attracted substantial attention in the AI sector, with its stock more than doubling year-to-date, outperforming many other AI-related companies.
Technical Analysis
The Relative Strength Index (RSI) for Palantir stands at 79; generally, an RSI over 70 is considered overbought. The 50-day moving average stands at $15.60 with the 200-day moving average at $11.84. The MACD (3-month) is at 0.07, signalling an uptrend. This suggests that while the short-term momentum is bullish, the stock might be overbought in the short-term.
Stock Performance Prediction
Based on both technical and fundamental analysis, it is anticipated that the price might retrace in the short term due to reaching overbought levels. However, considering the bullish news and the strength in government business contracts, it is probable the stock could exhibit bullish behavior over the upcoming week.
Assuming no significant market-wide disruptions or any company-specific negative news, for the next trading day, October 13, 2023, the stock could experience a mild pullback due to technical corrections. However, by the end of the next week, this stock might keep its upward trajectory and potentially break the resistance at $17.99.
Final Evaluation
Considering both the technical and fundamental analysis and the forward-looking statements, Palantir (PLTR) is evaluated as a 'Hold' with a 'Buy' potential in the long term. The fundamentals look promising with the company's position in the AI sector and government contracts. The future outlook based on DCF seems undervalued. The technical indicate possible short-term corrections. Given this, investors can consider entering a long position once the price shows signs of a rebound post short-term corrections.
